Barometer: Worried Farmers Focus on Input Costs

Farmer sentiment weakened in January as the Purdue University/CME Group Ag Economy Barometer declined 6 points to 119, down from 125 a month earlier. The decline leaves the barometer three points higher than in November and at its second-lowest reading since July 2020.

The index that measures sentiment of current conditions fell by 13 points from a month earlier to 133. Concerns about rising input costs and ongoing supply chain disruptions contributed to weakness in the current conditions index.

The Index of Future Expectations changed little.

The Purdue University-CME Group Ag Economy Barometer sentiment index is calculated from 400 U.S. agricultural producers’ responses to a telephone survey. Results published in February are based on surveys conducted Jan. 17-21.

The Farm Capital Investment Index weakened slightly this month, falling four points to 45. The investment index has been range-bound, fluctuating between 39 and 49, since September. Fifty-two percent of respondents in January said they plan to reduce their farm machinery purchases in the upcoming year, up from 48 percent a month earlier. More than 40 percent of producers reported that low farm machinery inventories were holding back their purchase plans.

Fifty-seven percent of survey respondents in January said they expect farm input prices to rise by 20 percent or more in 2022; 34 percent of producers said they expect prices to rise by 30 percent or more.

The disruptions extend not just to input pricing, but also input availability.
In January, 28 percent of producers said they have had difficulty purchasing crop inputs from suppliers for this year’s crops. In a follow-up question posed to producers experiencing such difficulty, respondents reported problems with a broad spectrum of inputs, including herbicides, insecticides, fertilizer, and machinery parts.